Correlation Between Sp Smallcap and Bny Mellon

Can any of the company-specific risk be diversified away by investing in both Sp Smallcap and Bny Mellon at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Sp Smallcap and Bny Mellon into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sp Smallcap 600 and Bny Mellon Income, you can compare the effects of market volatilities on Sp Smallcap and Bny Mellon and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Sp Smallcap with a short position of Bny Mellon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sp Smallcap and Bny Mellon.

Diversification Opportunities for Sp Smallcap and Bny Mellon

0.64

Correlation Coefficient

Sp Smallcap  Bny Mellon

Poor diversification

The 3 months correlation between RYSVX and Bny is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Sp Smallcap 600 and Bny Mellon Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bny Mellon Income and Sp Smallcap is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Sp Smallcap 600 are associated (or correlated) with Bny Mellon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bny Mellon Income has no effect on the direction of Sp Smallcap i.e., Sp Smallcap and Bny Mellon go up and down completely randomly.

Pair Corralation between Sp Smallcap and Bny Mellon

Assuming the 90 days horizon Sp Smallcap 600 is expected to generate 1.79 times more return on investment than Bny Mellon. However, Sp Smallcap is 1.79 times more volatile than Bny Mellon Income. It trades about 0.05 of its potential returns per unit of risk. Bny Mellon Income is currently generating about 0.06 per unit of risk. If you would invest  20,227  in Sp Smallcap 600 on October 24, 2024 and sell it today you would earn a total of  1,041  from holding Sp Smallcap 600 or generate 5.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Sp Smallcap 600  vs.  Bny Mellon Income

Sp Smallcap 600

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sp Smallcap 600 are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Sp Smallcap may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Bny Mellon Income

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bny Mellon Income are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Bny Mellon is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sp Smallcap and Bny Mellon

The main advantage of trading using opposite Sp Smallcap and Bny Mellon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sp Smallcap position performs unexpectedly, Bny Mellon can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Bny Mellon will offset losses from the drop in Bny Mellon's long position.

The idea behind Sp Smallcap 600 and Bny Mellon Income pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.